Islamic Law and the Finance of International Trade
2017-06-05T04:14:39Z (GMT) by
The aim of this paper is to provide readers interested in the law of international trade finance with an insight into the rules and principles governing the recent entry of Islamic banks into this area; and the issues which may arise when attempts are made to apply those rules in practice. By way of background, the reader is first provided with an overview of the emergence of modem Islamic banking. The paper also introduces both the main sources of Islamic law (Shariah), and those principles of Shariah jurisprudence which have shaped the evolution of modem Islamic finance. Part three of the paper then explores some of the particular legal issues which may arise when an international trading transaction is financed in accordance with the Islamic concept of murabaha (cost-plus-financing). While the exploration reveals some apparently irreconcilable contradictions between certain aspects of traditional Shariah jurispmdence and the modem law and practice of international trade finance, what it also reveals is the emergence of a new synthesis between Western practice and Shariah principles. The paper concludes that the emergence of this 'new Ijtihad' of Islamic cross-border trade finance is both promoted by, and is helping to strengthen, the current growth of Islamic involvement and influence in this area.